Study On Major Shareholders' Tunneling Of“*ST Pi Tu”

The company is a collection of various stakeholders,the agency problem has been a major problem of corporate governance,especially the sharp conflicts of interest between major controlling shareholder and minority shareholders.Relying on shareholding advantages,major shareholders have control of the company and decide the company's management.Therefore,they have the ability to transfer the interests to their own pockets and tunnel the high-quality assets of listed companies,which seriously damaging the interest of listed companies and minority shareholders.In recent years,the tunneling behavior of major shareholders in listed companies have been appeared frequently,which seriously damaging the legitimate rights and interests of investors and disrupting the orderly operation of capital markets.This thesis will take "*ST Pi Tu " company as a case,study the tunneling behavior of the major shareholders by analyzing its means,impact and causes,and try to put forward measures that can effectively curb the tunneling behavior of major shareholders.The reasons of tunneling behavior of "*ST Pi Tu " major shareholder are rather complicated and formed by the combined effect of internal and external factors.The internal reason is that there are major defects in the internal control of the company.The weakening of the internal governance mechanism of the company has created the best channel for the tunneling behavior of major shareholders.The failure of the external restriction provides the perfect conditions for the major shareholder to tunnel and the external supervision and punishment have not fundamentally restrict the tunneling behavior of major shareholders.This thesis finds that the main ways of "*ST Pi Tu " major shareholder tunneling are using the affiliated companies to transfer debts,utilizing affiliated enterprises to transfer high quality assets and violating external guarantees.Debts transfer from affiliated companies was mainly achieved through Xian Yan's infringement of client margin by Shenzhen Kesaiwei,a related party,resulting in "*ST Pi Tu " transferring the forecasted damages of the litigation as a forecasted liability to make the company's 2016 performance go from pre-earnings to huge loss.The transfer of high-quality assets mainly achieved through the use of the affiliates' direct injection of two subsidiaries of Jingmen Han Tong without the resolution of the board of directors,causing "*ST Pi Tu " to lose control of its major profit subsidiary Jingmen Hantong.The violation of external security can be find as Xian Yan's loan guarantee to Fang Hongxing,a 90% owned corporate legal representative,by using its corporate credit,etc.,without disclosure."*ST Pi Tu " major shareholder tunneling behavior caused a serious loss of listedcompanies,and heavy damage suffered by minority shareholders.Whether from the perspective of profitability or development ability,the tunneling behavior eventually leads to the decrease of the overall interest of listed companies and the drastic decline of profitability.Minority shareholders not only can not get dividends,but also lost huge interests caused by sharp drop in share prices.Therefore,this thesis argues that the tunneling behavior of major shareholders seriously infringes the overall interests of listed companies and the legitimate interests of minority shareholders.Finally,this thesis puts forward some policy suggestions on how to prevent large shareholders from tunneling from two aspects: internal environment and external supervision.It hopes to curb the tunneling behavior of major shareholders to a certain extent and protect the relative interests of small and medium-sized investors.